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Sagging Forecasts. Already there is mild jockeying for power between Board Chairman Simon and Executive Director Seidman. For the moment, Seidman, Ford's old friend and adviser from Grand Rapids, is closest to the President's ear, and there is not much that Simon can do about it. Seidman is a novice in high-powered Washington politics and has limited experience in economics. He is an urbane millionaire lawyer and accountant (Seidman & Seidman) and is regarded as a first-rate executive. He seems well suited for his job of coordinating the board's policies and managing its day-to-day activities. Says one Administration admirer: "Seidman is moving on a very fast learning curve."
Meanwhile, the exquisitely complex challenges confronting Washington's new economic team grow more ominous. Month by month recently, the economy has sagged more than the Government or private forecasters have expected. Some economists are openly mulling over possibilities that even a short while ago were unthinkable. For example, just before Greenspan took office last month, his consulting firm, Townsend-Greenspan, warned clients that "although we do not expect a breakdown in the financial system near term, it cannot be ruled out as a possibility at some point in the future."
The most potent inflationary forces are outside the direct control of Government. The soaring costs of fuel and food account for about half of the present inflation. But oil prices are dictated by the OPEC cartel, and food prices have been sent skyward by capricious weather. A combination of heavy spring rain, summer drought and early fall frost has already reduced crops of corn, wheat and soybeans, boosting the cost of everything from bread to salad oil, and feed for cattle and hogs. In August alone, the wholesale price of farm and food products rocketed 7.6%, and some Government economists believe that retail food prices could go on rising at close to 15% throughout much of 1975.
The White House is trying to avoid a massive flow of American farm goods out of the country. It will require that grain exporters get Government approval for all big sales to foreigners. Last week Ford intervened to halt the sale of $500 million of grain to the Soviet Union, even though the dealers—Manhattan's Continental Grain Co. and Memphis' Cook Industries—had already signed the contracts.
Living costs are now lunging ahead at a compound annual rate of 16.8%, and even the most optimistic forecasters do not expect them to come down much below 8% until mid-1975. The price surge has cut factory workers' real in come by 4.1 % below a year ago and has flattened consumer spending.
Prices are certain to go even higher. The wholesale index in August soared 3.9%, to a harrowing annual rate of 46.8%. Says Economist Otto Eckstein of Harvard: "If the wholesale index does not do dramatically better by, say November or December, then the outlook is pretty grim." One hopeful sign: after several years of going straight up, prices are dropping on many raw industrial commodities, including cowhide, copper, rubber, wastepaper, cotton, lumber and steel scrap. They are declining largely because of reduced demand.